Mario Draghi challenged the Eurosceptics by noting that “Italy is the country that has earned the most from the euro”. The single currency, thanks to the political turbulence, risks being a constant element of the political struggle of our country. Also because, at a Community level, the contradiction between an economy that is struggling to get out of recession and a currency which, supported by German-style fiscal rigour, is sailing at highs against the yen and significantly up against the dollar, creates additional obstacles for Italian exports, which already have plenty of internal constraints.
One has to ask oneself, a few days after the board meeting, what the ECB will do to govern a situation that presents several critical aspects, starting with Italy, of course, but not only. The negotiations for the new German government appear to be on the high seas. Meanwhile, in view of the deadlines of the banking union, the lobbies (French and German in primis) are sharpening their weapons.
In short, there is ample material for a scholar like Mario Noera, professor of financial market economics at Bocconi University who, these days, is concentrating on examining the innovations envisaged by the Treaty of Lisbon. And we'll see why.
FIRSTonline – But let's start with the euro: the EU economy is weaker than the US one, but the currency has appreciated. How long will Europe resist in the face of this contradiction?
“It actually seems to me that central banks have so far managed the tensions with some success. A few months ago I was worried about the fate of the strong euro, given the boost caused by the launch of Abenomics. However, it seems to me that the quotations run on a fairly contained track, between 1,30 and 1,35, or so. The fact is that the only element of certainty in such a tangled situation remains monetary policy. Both the one practiced by the Federal Reserve or the Bank of Japan and the one announced, but equally effective, by the ECB. The world still cannot do without the weapons of central bankers."
FIRSTonline – Draghi's weapons, reply the US commentators and the Financial Times, give the impression of being dull or at least less powerful than those of the Fed or the Boe.
“But Draghi had a formidable ally: Angel Merkel. It was the chancellor who supported the OMT plan against the Bundesbank. It was a skilful and farsighted political choice, which will allow her to keep running the political game in the future. As far as the ECB is concerned, it seems obvious to me that the German government will support the current policy: guaranteeing the liquidity needed by the system without accepting deviations from the already agreed fiscal policy path. Therefore, the low guidance on rates will be maintained. The only real unknown will be the verdict of the German Constitutional Court. But there are solid legal reasons in favor of the OMT plan".
FIRSTonline – Until when?
“European politics will change pace when there is talk of full employment instead of recovery. Then, finally, we will return to thinking in terms of demand policy, the only one that can guarantee the recovery of employment”.
FIRSTonline – When will it happen?
“A leap like this will take years. Let's say 3-4 years. It will be a slow process, as also demonstrated by the US economy distinct from the recovery without appreciable progress in employment. The recovery is much slower than the Fed hoped. And if Janet Yellen succeeds Ben Bernanke, the strategy will be even more cautious. Lest we forget the clash over the budget, the reason that prompted the postponement of the tapering. Everywhere, with the exception of Japan, the world has not yet come out of the debt syndrome and the prevalence of the supply economy”.
FIRSTonline – Germany, in particular, shows no signs of changing. Or not?
“I believe that things will change significantly. Given that it will not be easy to form a government, the elections have greatly reduced the Eurosceptic right and swept away from Parliament. Merkel will only be able to form the government with a leftist ally: the SPD or the Greens. The latter, "snatched" by the CSU-CDU of environmental policy, could focus on Europe. Even the SPD, still in shock after the adoption of the Schroeder plan, could reopen the pro-European dossier”.
FIRSTonline – Clashing with Merkel?
“In reality, Merkel has shown herself to be a statesman with superior political intelligence. And she won't let herself be cornered. Indeed, for some time now you have taken the initiative in European reforms, gradually breaking away from the hawks of the Bundesbank or Ollie Rehn Your support for Draghi was no coincidence. The German government has armored the European process with automatic and non-discretionary mechanisms: this applies to the balanced budget included in the constitutional documents, it applies to the intervention mechanisms on the banks and so on. There is a precise reason behind this strategy”.
FIRSTonline – Which one?
“The theme is as neglected in Italy as it is felt in Germany or in other countries. Next year the Lisbon Charter will enter into force which, among other things, significantly strengthens the powers of the European Parliament. There is a strong request to appoint the next president of the Commission in Parliament. And according to the charter, the accounts of the individual countries will have to pass a double examination, that of the executive but also of the Community legislative power. A promising political space is opening up for the European left. Merkel, however, has already played in advance by imposing precise stakes on the process".
FIRSTonline – In any case, a more constructive Europe is emerging, capable of going beyond rigor over time.
"I think yes. The signs are there. At least within certain limits. But I'm quite confident about the arrival of resources to manage, for example, under the hat of the EIB or the like. A slow, systematic, German-style process. But able to avoid, among other things, currency turbulence in both directions”.
FIRSTonline – And what role can Italy play?
“Whatever he wants. If we are able to present ourselves in conditions of political as well as economic decency at the appointment of the European semester, we will have a lot to gain, as Draghi underlined”.
